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New Metrics
ROSI:
JetBlue's Unique New Metrics for Assessing the ROI of Sustainability

In a whitepaper released this summer, JetBlue explores how building wider purpose into brands yields competitive advantage. “The Matter with Metrics: Measuring the ROI of Sustainability” presents a four-pronged framework to creating and measuring authentic sustainability programs and consumer messaging.

I spoke with Nancy Elder, VP of Communications at JetBlue and co-author of the paper, about how to bake sustainability into business models and reap its multiple financial benefits.

How did the whitepaper come about, and how does it fit into JetBlue’s broader sustainability program?

Mark Stapylton, my co-author, and I have had a running conversation for several years about the state of play in sustainability — how much progress has been made in sustainability and social impact reporting, and yet how much more work that needs to be done by companies in general.

This whitepaper was written from an agnostic point of view. The theory is that if you have this framework looking at it from four perspectives, you have a better sense of what's going on at any company. We've just begun to apply this framework at JetBlue, so while we’re looking for examples to highlight, we've got a long way to go.

The paper discusses the importance of integrating an “authentic” wider purpose into a brand. What do you mean by authenticity? How can we distinguish between a "real" sustainability program and a mere marketing initiative?

This is such an important question, because we're not trying to judge any one thing. When I think about this, it’s not dissimilar to what Supreme Court Justice Stuart said in the ‘60s about pornography. He said, “you know it when you see it.”

I think when something is authentic or more of a marketing initiative by now, we know it when we see it. The problem is, how do we build it into all businesses? I think the SB community is still working on that. It's an uphill battle because I think some companies are riding on the coattails of what should be an authentic movement. I think we know [authentic sustainability] when we see it by now.

Firstly, we wanted to look at a framework to try and make this more digestible. In a lot of cases, our theory is that you can take some existing brand metrics and adapt them for sustainability. But it's still a lot of work to do that.

Brand. We're in the really early days here, but we think there's a really important connection to be made to customer lifetime value (CLV), which was popularized in the early 1990s. We're still looking for really good examples here, but we wanted to at minimum showcase value of the CLV work to get the ball rolling. CLV is a really important way of measuring financial return on brand. If you literally adapted it for social impact and sustainability, we'd be a lot better off.

Return on Talent. This is a really interesting one to us and to others, because people are coming to companies and staying because of a sustainability commitment or a commitment to CSR. Employee retention is a really important measure.

Mark and I heard Stanley Litow from IBM give a talk a few years ago about IBM’s measurement of social impact and employee engagement. They were able to correlate the engagement that an employee has in a social program with stronger likelihood to staying with the company, which is huge. To bring it home on a personal level, I'm a living example of that. I joined JetBlue because of its mission to inspire humanity. It's a really potent measuring tool. Like with CLV, you simply need to insert social impact and corporate responsibility into your existing employee satisfaction tools. But I don't think everybody is yet.

Reputation. I think that sustainability is in many ways the epitome of a reputational issue. General Electric is one of the shining examples of having gone from a reputation for polluting rivers earlier in its history to being a leader in environmental responsibility. In 2007, Jeff Immelt, their CEO, was heralded as a hero of the environment in 2007, when a decade before they were battling the EPA. More important than reputation, they've reoriented their business with a commitment to innovation and eco-imagination. And that's had a measurable impact on their business and also their reputation. That kind of work doesn't come easy. It's a long-term commitment because it's the right thing to do — not just for your reputation, but for your business.

Individual programs. This one kind of seems like the easiest — you know, does your program make money for you? But it actually isn't that easy. We've had a recent example: our uniformed bag program. JetBlue had overstocked uniforms because we transitioned to a new uniform, and we've turned that into a bag program. It's an example of a hidden cost turned into a revenue generator. Instead of incinerating the bags — which would have been a complete waste — we actually worked with Manhattan Portage and turned the uniforms into these great bags that we sell to our customers and give out to crew members as incentive.

Instead of doing the wrong thing via landfill, or doing what seems like an easier thing — incinerating — which would have had a whole other level of cost to it, we turned it into an upside and said “let's make something from these.” And we've made revenue from these never worn and overstocked uniforms. The more important point of this is we exposed a hidden cost with astute accounting. So that one kind of hits across of a couple of these things.

How is JetBlue implementing this framework?

It's early days for us, because we're just thinking through the framework here and how it would apply. Your question sparks a specific example about how we make decisions for what to invest in. And it's a really practical one.

We're really analyzing how we communicate about our social impact and sustainability. We've done a lot of work recently on how and where we're sharing our sustainability story through social media. And because of the sheer volume — just on Facebook or Twitter — of positive impact stories, we can't throw them all out there at once. We had to really calibrate when and how we're talking about all the programs we're working on.

As one example, we had a couple of really beautiful stories that illustrated our corporate responsibility strategy and its benefits to the community, but some don't resonate. We had invested heavily in sharing a story about beach cleanup. By investing in a large-scale cleanup for customers, we were showcasing the benefits to the community and the tourism industry. But guess what? It turns out that reading about beach cleanup is boring; people weren't interested in it. They didn't want to read about picking up trash on Twitter, and it turns out that very few people even wanted to do this on their vacation. There's segment of the population of course that does, but when we were trying to do it on such a scale, it wasn't appealing.

We terminated the program for customers and we stopped talking about it on social media. We didn't do away with all together — instead we transferred it to our crewmembers since the activity was more successful as an employee engagement exercise than customer outreach. The result is we ended up with a self-funded, self-running engagement program instead of paid placement on Facebook for customers that didn't want to do this to begin with. So our exploration of how this is all coming across socially actually ended up informing our strategy in and of itself.

JetBlue's Emissions Offsetting Program is mentioned as an example of an initiative that fits with the airline's authentic purpose. What were the origins of that program and how does it serve JetBlue's aim for shared value?

It's something that hits across the entire framework. Because as an airline, it would be disingenuous for us to do anything other than focus on the emissions from our aircrafts and their impact. So when JetBlue started working on its sustainability platform and strategy — even before that, the folks that started the airline knew offsetting had to be part of the proposed and offered solution.

It's a tricky program, because the more intricate conversation is how to communicate there's a connection and a relevance to customers going on vacation or a business trip to what we can offset. We can translate emissions into numbers of cars taken off the road, but that still lacks that emotional connection. It’s been a communication challenge because offsetting requires a basic knowledge of atmospheric circulation, and we can't really explain that to customers while we're doing snack service on the flight.

So we've created a separate page on our website about offsetting. We did a 30-second video that has been really popular with customers to help them understand what our whole offsetting thing is about. We've been doing crew member travel offsets and encouraging customers to offset travel since 2008. Since 2013 we've been calculating and disclosing our CO2 and CO2-equivalent emissions. We've offset over 1 billion pounds of CO2 and have been working with the Carbon Fund since 2008. We've made good progress in this area because this is where we believe the biggest impact is. In fact we just did a special offset program related to our partnership with the Surf Rider Foundation. We're finding these innovative ways to make a complicated topic seem a more digestible for our customers, because they're the ones that have to partner with us in order for us to do this.

JetBlue's Ocean Health Initiative supports beach cleanup in the Caribbean. The recent report, EcoEarnings: A Shore Thing, correlates the health of its destinations with JetBlue's financial returns. How will such initiatives benefit your long-term profitability?

The EcoEarnings report was a really good way of making the correlation that seems to be missing for a lot of companies. You only have to take one look at JetBlue's flight map to understand why we profit from people wanting to head to the beach and the shoreline. It's a huge part of our business. For people going on vacation, we're the largest airline to fly in the Caribbean. The direct relationship we have to the beach and our profitability is tied to our customers' desire to go on vacation and see these precious spots.

The way I think about it is this: if the Caribbean oceans and beaches were actually like a hotel, and if the hotel were a disaster, people wouldn't go there. If we've heard from [Disney CEO] Bob Iger that Disney was going out of business, we would do anything we could to make sure they weren't. We have a lot of people that go to Orlando to go to Disneyland, so it's a huge focus city for us. The beaches don't have a CEO, so we have to be the ones that help steward this for us remaining in business — for our sustainability as a business, not just for sustainability as a program.

No one had made the link before between what business we're in and the health of the beaches and the ocean — EcoEarnings is the first research report to do so. We're scratching the surface of what could be done to help our customer base understand that where we go is as important as what happens when you get there.

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